'Mutual Fund Kyu Sahi Hai': MF experts on the next important focus in investor education

"Mutual Fund Kyu Sahi Hai, Kaunsa Sahi Hai ( Why is it important and which one is important) should be the message believe industry leaders.

As the industry grows further, mutual fund leaders are highlighting the need for educating investors on which funds are the right fund for them. Speaking at Moneycontrol's Mutual Fund Summit 2025, Radhika Gupta, MD and CEO of Edelweiss Mutual Fund, suggested that the industry had already provided investors with the legos and building blocks but not the way in which they could build with these blocks. "We need to be more solution oriented. As an industry we have created many pieces like Lego. What we need now is creating awareness about 'Kaunsa Mutual Fund Sahi Hai'," she said.

Gupta added that while there were challenges in creating this "recipe book" it was an important next step for the mutual fund industry.

SBI MF's Deputy Managing Director & Joint Chief Executive Officer DP Singh concurred adding that the next important aspect in education was "Mutual Fund Kyu Sahi Hai, Kaunsa Sahi Hai ( Why is it important and which one is important).  "We have recently launched a website to help investors not just ask ‘Mutual Fund Sahi Hai’, but also understand ‘Kyā Sahi Hai? Kyun Sahi Hai?’ That’s more important,” he said adding that investor education is being pursued at both industry and individual AMC levels, especially in the wake of robust returns over the past five to ten years. “It’s our responsibility to take this message to every nook and corner of the country,” he  added.

HDFC AMC MD & CEO Navneet Munot added that what the industry did with the "Mutual Fund Sahi Hai" campaign is actually a form of pre-suasion. "We created curiosity by showing people that they've been investing — not just for decades, but for hundreds of years. Indians are great savers. But now, we need to become great investors. You've been investing in a certain way, but maybe it's time to consider other options. What we did — as an industry, collectively — with the support of advisors, distributors, and people like you, was to guide that persuasion. To help investors understand what is truly right for them," he said.

Nilesh Shah, MD & CEO of Kotak AMC noted that thanks to the regulator, mutual funds are slowly expanding the kind of products which MFs can provide to investors.

"We already have a range of products across the country, including income-generating funds and precious metals. But the opportunity lies in expanding into many more product categories. Thanks to SEBI, we are slowly and steadily making progress in that direction. However, any such expansion will require a strong rule of law. In investing, the return of principal is more important than just the return on principal. In India, if you're stuck in an illiquid or unregulated structure  there's no certainty about when — or if — your principal will be returned," he noted.

This is why he believes that there is a need for a strong regulatory framework. "It will help us create structured offerings that span the risk spectrum — from low to high risk. Over time, this will allow us to develop enough products to meet the diverse return expectations of our investors," he said.

Another common discussion is growth of thematic funds and concerns around it. Experts noted that it is about taking the right calls and also educating investors.

There has to be better nuance and better balance. We need to bring better responsibility and balance suggested Kalpen Parekh, MD and CEO OF DSP Mutual Fund. He added that while they would like to just keep a few funds investors have different needs and they need to cater to their needs. "We try to keep it intuitive. We ask ourselves — will we put our own money into this fund? If the answer is yes, we go ahead. If the answer is no, we don’t launch it,” Parekh explained.

Citing a real example, he recalled a time when their natural resources fund delivered a 40% CAGR by investing in energy and metal stocks. “We actually stopped taking fresh money into the fund and issued a large disclaimer in black and red on our website saying this is a thematic fund — not suitable for all, and appropriate advice is necessary," he said.

While thematic products can often confuse retail investors, Parekh believes the solution lies in better education and transparency. “Sometimes, low-cycle thematic funds can deliver very superior returns for sophisticated investors. The key is to highlight the risks clearly.”

Munot added, "I think all of us have a sense of responsibility (to our investors on thematics and protecting and informing them of risks). No question about that."